Pemex settles on new refinery site; to upgrade another

Eric WatkinsOGJ Oil Diplomacy Editor

LOS ANGELES, Aug. 14 -- Mexico’s Petroleos Mexicanos (Pemex) said it has settled on a site at Tula in Hidalgo state to construct a $9-billion refinery, and will modernize another facility at Salamanca in nearby Guanajuato state for $3 billion.

According to Pemex Chief Executive Officer Jesus Reyes Heroles, Hidalgo was the first of the two states to acquire the 700 hectares the firm needed for the refinery, ending a contest between the two over which would host the new facility.

The contest began shortly after mid-April when Pemex announced plans to build the refinery in Tula while simultaneously carrying out a reconfiguration of the Salamanca refinery in Guanajuato state (OGJ Online, Apr. 16, 2009).

But Hidalgo failed to produce the needed 700 hectares within 100 days of the original announcement, and Pemex then said the new refinery would go to whichever state acquired the land first, while the other state would have its existing refinery reconfigured.

According to Heroles, the Hidalgo government was the first of the two states to complete “all the necessary requirements to guarantee legal certainty on land ownership that the state company requires.”

The 300,000 b/d facility to be built in Tula is expected to come on stream in 2015, while the expansion of the Guanajuato facility will be ready by yearend 2014.

Reyes said it will cost $673 million less for Pemex to build the refinery in Tula than in Salamanca, largely because of lower costs for pipelines and transport.

“The crude for the new refinery, which comes from the south of the country, will (travel a shorter distance to reach) Tula, and therefore the amount to be invested in pipelines and transport will be less,” he said.

Detailing figures, Reyes said that a total of $859 million will be invested in pipelines for the Tula refinery, compared with $1.28 billion if the Salamanca site had been chosen.

Reyes said Tula was chosen also because it can use 70,000 b/d of residual fuels produced at existing refineries in the area, compared with just 50,000 b/d at the Guanajuato facility.